Kotak Securities has tied up with Nasdaq-listed Interactive Brokers to help its Indian and non-resident Indian customers invest in overseas stock markets, the latest in a series of brokerages capitalizing on the interest in international stocks.
Interactive Brokers, which has a market cap of about $23.2 billion, has a direct presence in India through Interactive Brokers India Pvt. Ltd, offering trading on Indian exchanges and an office in Mumbai.
A surge in US stocks in recent years, and the rise of the US dollar against the Indian rupee, have heightened interest in foreign stocks. The tech-heavy Nasdaq has delivered a compounded annual growth rate (CAGR) of around 24% in rupee terms over the past five years.
Indians are permitted to remit up to $250,000 every year under the liberalised remittances scheme (LRS) for investment in foreign stocks and bonds.
According to Reserve Bank of India (RBI) data, Indians remitted $431.41 million in 2019-20 for this purpose.
These remittances shot up to $73.61 million in September 2020 from $27.37 million in the preceding month, in anticipation of a 5% Tax Collected at Source (TCS) on LRS remittances above ₹7 lakh from 1 October. The TCS can be set off against other taxes due by the taxpayer.
“We have a client base of 2.25 million and 650,000 active clients. Customers who opt for this service will have to pay a flat brokerage of $1.99 regardless of the size of their trades,” said Jaideep Hansraj, managing director and chief executive officer, Kotak Securities.
Rivals HDFC Securities and Axis Securities have already entered this space by tying up with Stockal and Vested Finance, both fintechs operating in this space.
“Since our tie-up with HDFC Securities a year ago, we’ve added 45 more partnerships, including brokerages like Motilal Oswal and Geojit and advisors and wealth management firms. While brokerage clients invest $5,000-6,000 with us on average, wealth management clients show ticket sizes of $50,000 and above,” Sitashwa Shrivastava, founder of Stockal, told Mint in November.
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